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Euro Area Economic Forecast

Euro Area Economic Outlook

The economy will expand only modestly this year, weighed down by elevated inflation, higher interest rates and global headwinds. Next year, growth should gain traction amid rising real incomes and an improved global backdrop. ECB monetary policy is a key factor to watch. Potential turbulence in the banking and financial sectors and high levels of public debt pose risks.

Euro Area Inflation

Harmonized inflation fell to 5.2% in August from 5.3% in July. Prices for services rose at a softer rate, while energy prices declined at a slower pace. Inflation should decline from its current level during the rest of the year and next amid elevated interest rates and subdued economic growth. A wage-price spiral and commodity price spikes are upside risks.

This chart displays Economic Growth (GDP, ann. var. %) for Euro Area from 2010 to 2022.

2018 2019 2020 2021 2022
GDP per Capita (USD) 40,732 39,820 38,714 43,295 41,462
Economic Growth (GDP, ann. var. %) 1.8 1.6 -6.2 5.5 3.4
Private Consumption (ann. var. %) 1.5 1.4 -7.8 4.1 4.3
Fixed Investment (ann. var. %) 3.2 6.5 -6.5 3.6 2.9
Industrial Production (ann. var. %) 0.8 -0.8 -7.4 8.8 2.1
Unemployment (% of active population, aop) 8.2 7.6 8.0 7.7 6.7
Fiscal Balance (% of GDP) -0.4 -0.6 -7.1 -5.3 -3.6
Public Debt (% of GDP) 86.1 84.1 97.2 95.5 91.6
Policy Rate (%, eop) 0.00 0.00 0.00 0.00 2.50
Exchange Rate (LCU per USD, eop) 1.1 1.1 1.2 1.1 1.1
Current Account Balance (% of GDP) 2.9 2.5 1.7 2.8 -0.8
Merchandise Trade Balance (USD bn) 324 333 377 324 -83
Money (ann. var. of M2 %) 4.4 5.8 11.0 7.1 3.7
Merchandise Exports (USD bn) 2,742 2,667 2,482 2,948 3,079
Merchandise Imports (USD bn) 2,418 2,333 2,105 2,623 3,163
International Reserves (USD bn) 378 387 423 566 557

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